Clean Science sees bumper stock market debut, lists at 100% premium
- Clean Science's customers include manufacturers and distributors in India and international markets including China, Europe, the US, Taiwan, Korea, and Japan. Nearly two-third of its revenues comes from exports
MUMBAI: Shares of Clean Science and Technology Ltd (CSTL) made a strong stock market debut on Monday, listing at a nearly 100% premium to their issue price.
The stock opened at Rs1,784.40 apiece on the BSE, a jump of 98.3% from its issue price of Rs900. The benchmark Sensex was down 0.7% at 52782.
The speciality chemicals manufacturer's Rs1,546 crore initial public offering (IPO) was subscribed over 93 times last week.
The company is among the few global manufacturers focused on developing newer technologies used in house catalytic processes, which are eco-friendly and cost-effective.
The IPO is valued at 42.2 times its FY21 earnings, which looks to be reasonably priced.
Peers like Vinati Organics trades at 77.4 times its FY2021 EPS of Rs26.2, Fine Organics Industries at 75 times its FY2021 EPS, Navin Fluorine International trades at 76.1 times its FY2021 EPS of ₹49.9 and PI Industries trades at 62.2 times its FY2021 EPS of ₹48.7, which offers valuation comfort for Clean Science.
On FY21 earnings basis, Clean Science is trading below the industry average of 55.4 times, analysts said.
"We note CSTL’s RoE at 37% is superior to its peers, which along with a healthy asset turnover ratio at 3.8x FY21 (at utilization of 72%) and better OCF yield offer an edge. Further, strong growth prospects for domestic specialty chemical manufacturers on the back of China+ One strategy may eventually aid CSTL to sustain strong earnings momentum, going forward," said Reliance Research in a note to its investors.
The Pune-based company is the largest manufacturer globally of speciality chemical products such as MEHQ, BHA, Anisole and 4-MAP and manufactures functionally critical speciality chemicals such as performance chemicals, pharmaceutical intermediates and FMCG Chemicals.
Customers include manufacturers and distributors in India as well as other international markets including China, Europe, the US, Taiwan, Korea, and Japan. Nearly two-third of its revenues comes from exports.
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